Growth-focused portfolio with high exposure to momentum stocks within the S&P 500
Report created on Aug 21, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
SP Invesco S&P 500® Momentum ETF
SPMO - US46138E3392 100.00%
This portfolio is fully invested in the Invesco S&P 500® Momentum ETF, making it highly concentrated with a focus on stocks exhibiting strong momentum within the S&P 500. Such a singular focus on a momentum strategy within a single ETF presents both a high potential for growth and an increased risk profile. The ETF's sector allocation leans heavily towards Technology, Financial Services, and Consumer Cyclicals, reflecting a typical momentum-driven composition where sectors that have performed well recently are overweight.
Growth
Historically, this portfolio has shown an impressive Compound Annual Growth Rate (CAGR) of 22.13%, with a significant maximum drawdown of -30.93%. These figures illustrate the portfolio's high growth potential but also underscore its volatility. The days contributing to 90% of returns being concentrated in just 39 days highlights the portfolio's reliance on short, sharp gains, which is characteristic of momentum investing strategies.
Projection
Using Monte Carlo simulations, which project future performance based on historical data, this portfolio shows a wide range of outcomes. The median projection suggests a potential increase of 1,598.7% in value, with a high degree of variability indicated by the 5th and 67th percentiles. It's important to note, however, that these projections are inherently uncertain and past performance is not indicative of future results.
Asset classes
- Stocks 100%
The portfolio is entirely allocated to stocks, with no diversification into other asset classes like bonds or real estate. This lack of diversification can lead to higher volatility and risk, particularly in market downturns. Diversifying across different asset classes can help mitigate risk while potentially smoothing out returns over time.
Sectors
- Technology 25%
- Financials 19%
- Consumer Discretionary 15%
- Telecommunications 15%
- Industrials 10%
- Consumer Staples 9%
- Utilities 3%
- Health Care 2%
- Energy 2%
- Real Estate 1%
The sectoral allocation is concentrated in sectors that have historically shown strong performance, such as Technology and Financial Services. While this concentration can lead to significant gains during bull markets, it may also increase the portfolio's susceptibility to sector-specific downturns. Diversifying across a wider range of sectors could help reduce this risk.
Regions
- North America 100%
The geographic allocation is entirely focused on North America, specifically the United States. This concentration in a single region, while potentially capitalizing on the growth of the US market, limits exposure to potential opportunities in developed and emerging markets outside of the US. A more global allocation could provide a better risk-reward balance.
Market capitalization
- Mega-cap 54%
- Large-cap 33%
- Mid-cap 13%
The portfolio's emphasis on Mega and Big cap stocks aligns with its growth and momentum strategy, as these companies often lead market rallies. However, the underrepresentation of Medium and Small cap stocks limits opportunities for outsized gains that smaller companies can offer, albeit with higher risk.
Dividends
- Invesco S&P 500® Momentum ETF 0.60%
- Weighted yield (per year) 0.60%
The portfolio's dividend yield of 0.60% is relatively low, which is typical for growth-focused investments prioritizing capital appreciation over income. Investors seeking regular income alongside growth may want to consider adding assets with higher dividend yields to their portfolio.
Ongoing product costs
- Invesco S&P 500® Momentum ETF 0.13%
- Weighted costs total (per year) 0.13%
With a total expense ratio (TER) of 0.13%, the portfolio benefits from relatively low costs, which can enhance net returns over time. Keeping costs low is crucial for long-term investment success, especially in strategies focusing on marginal gains like momentum investing.
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